Understanding Environmental Regulation and Water Policies in Appalachia

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Tom Tugend
11/02/2012

The Marcellus play reaches across several key states in the Appalachian region. In this Q&A interview, Tom Tugend, Deputy Chief of the Oil and Gas Program at the Department of Natural Resources, Ohio, joins Amber Scorah of Oil & Gas IQ to talk about protecting water resources, drilling regulations, and environmental compliance in the Marcellus play regions, with a focus on Ohio.

Amber Scorah: Can you first tell us what initiatives are underway to protect water
resources in the Marcellus play?

Tom Tugend: We have several things going on now and that will be continuing over
the coming months and coming years in the development of the shale resources in
Ohio. Looking back six to eight months, we’ve increased our inspection staff by
approximately 35%, adding new inspectors primarily focused on the shale play areas of
the state and we’re also looking at adding an additional 15% toward the end of late
summer and the first part of fall.

We see the shale development starting to increasing dramatically next year. The addition of field staff is a very positive thing in light of difficult budget environments throughout the nation.

In 2010, new legislation was enacted providing for additional funding to hire additional
staff, and that’s allowing us to increase our field focus, enforcement focus, and our
permitting focus out of our central office; Very positive changes and we are continuing
to get positive support from our new administration.

We are conducting a great deal of training and development, not only training for new inspectors, but refresher training for existing inspectors in the areas of well construction, well controls, and cementing; again, a real positive focus to make sure that when the shale wells are drilled as well as any well in the state of Ohio , that proper casing is placed to protect surface and underground sources of drinking water. We think we do that quite well.

We’re also meeting with our other state and federal regulatory agencies and other divisions with ODNR to discuss issues related to shale. Obviously, there’s a lot of information in the news media and on the internet, and we’re sharing factual information with our other regulatory parties in the state of Ohio, EPA, Department of Health, the US Corps of Engineers, and our other sister divisions within ODNR. We are seeking assistance from parties where they may have a field presence like our division of soil and water, who are very knowledgeable in erosion control and prevention..

We have initiates a new process whereby prior to permit issuance, we’re conducting prepermit issuance site reviews with our field staff and the applicants to identify any areas of environmental concerns, well location and ingress and egress issues in an effort to eliminate problems before they happen and to direct the applicants to other parties like the corps engineers or environmental protection agency where well issues, stream or wetland issues might be involved. We are practically anticipating the developments that are starting slow here in Ohio at this point, similar to what happened in Pennsylvania back in the 2007 timeframe. We are trying to get ahead of the game so to speak by increasing our field presence and our permitting presence ready and for the increased activity, we know that is coming.

Amber Scorah: In your opinion, what is the most environmentally compliant
means of waste water disposal?

Tom Tugend: In Ohio we are what is called a primacy state, The USEPA delegated to the state of Ohio in the early 1980s the authority to oversee Class 2 injection wells, and we’ve been overseeing that program in Ohio in that our laws are as stringent or more stringent as the federal law.

Therefore, the primary method in Ohio is the use of Class 2 injection wells. We have some minor use of brine (produced water) for dust and ice control , Ohio’s geology is favorable for the use of injection Class 2, injection wells as a safe means for disposal to produce water and waste water from the drilling operations, and that’s what we see as being the main source of disposal into the future The capacity in Ohio for drilling fluids and produced water to go to injection wells will increase with the increased inventory of the injection wells that we will see over time.

Amber Scorah: What regulations are now in place to protect Ohio’s natural
resources from the impacts of hydraulic fracturing?

Tom Tugend: Several things -- our permitting and field inspection components of our
oversight places a very high priority and emphasis on designing during the permitting
process and overseeing during the drilling process both the placement and cementing
of surface casing and the cementing of other strings of casing in the well bore to prevent
impact to ground water or surface water resources. We have placed a very high priority
on the design of casing programs and field oversight over this activity for a long period
of time and are going to continue to do so.

On the completion of a well, the owner must provide us detailed records of the hydraulic
fracturing process including the volumes of fluid used, the chemicals used, and they
must provide to our division, the MSDS sheets (material safety data sheets) for every
chemical listed on the well completion invoice. We post the MSDS sheets on our
website. Senate Bill 165 effective mid summer of 2010 overhauled our oil and gas laws
required that companies provide prior notice of at least 24 hours of a number of
activities on the well site, one of which is the placement of the surface casing.

Companies must give us prior notice to enable our staff to oversee the cementing of
the surface casing, the testing or blowout prevention devices, well control devices, and
so forth during the drilling process to ensure that the processes that the companies are
using are properly done thereby preventing impact to the environment. We’re currently
meeting with subject matter experts in relation to identifying if additional well
construction rules are needed.. We are doing a number of things now internally and in
conjunction with the industry to make sure the well drilling processes are done correctly.

Amber Scorah: Do you encounter cross-border wastewater disposal? Do E+P
operators drilling in neighboring states use Ohio’s Class II Injection Well
facilities?

Tom Tugend: Under Ohio revised code chapter 1509 and the rules under the Ohio
administrative code 1501 set the "boundaries" for our regulatory authority for waste
water disposal. There are no regulations that limit the disposal of fluids in the Class 2
injection wells to just fluids produced from our regulatory districts in the state of Ohio.
We do receive drilling fluids, drilling wastes and the produced water from areas that are
outside of our regulatory districts.